Series LLC or Wyoming Holding Company?

Question

Hi to all,

I had a consultation from a referred lawyer (here on BiggerPockets) a couple of days ago. The Youtube videos and a few reviews were excellent.. but the person that I had as an advisor was a "presenter" not a lawyer... I emailed him several questions the day before and confirmed that he received all the questions with him via email... he had plenty of time to get the answers... he said that all my questions will be answered during his presentation... well I was VERY disappointed. The presentation gave me the same information that I found on this forum and others, and several youtube videos... what a wast of money ($150). The only new information was the "packages" that they offered... overpriced IMO.

So im going to ask members your opinion.

We have a few properties in 2 estates, we live in one of this estates.

Should we...

1- Open a Series LLC, then a Land trust to "mask the owner ship of it", then open child series, open another Land trust, deed one property to it and do the same for every child series? This was suggested by the company that offered the consultation.

2- Open a holding LLC in Wyoming, then open one LLC per property and deed one property to each one... all LLCs will be owned by the Wyoming LLC.This is the setup suggested by another company.

This is a basic explanation... but is a complex thing to explain in writing... it would be easier if I can draw it. :)

Thank you for your help and suggestions.

Bill S. · Answer

@Carlos Corredor so at the risk of playing attorney, I will be a bit crass and blunt. If you are going to set up your financial future and protect your assets, you need more help than what comes from Google and online seminars (aka sales pitches).

If you have a lot of money and these properties could risk that, then pay an attorney to solve your problem. It will cost you way more than $150 too but you can afford it since you have something to loose. If you can't afford it, you have nothing to lose so the whole LLC thing is a mute point. Keep in mind, just legitimately maintaining the legal entities proposed in either option would likely cost more than the properties you mentioned would make you in a year.

If you still want to pursue the matter, the approach is to learn which way you want to go. Find an attorney that uses that approach and hire them to do it for you and to do it right. They should also provide you with the frame work to manage those entities in compliance with the law and to provide the protection you seek. You then need to hire professionals to execute that framework. There is no magic legal framework that is one and done. You have to use them and maintain them in the way they were intended.

Jerry W. · Answer

@Carlos Corredor, the problem is that you have not given us enough information to help you out.  How you invest in real estate and what your net worth is are really important questions in order to craft a plan.  Many of the anonymous plans touted by folks selling protection are not really workable for the average person.  Staying anonymous doesn't work if you are the guy negotiating the deal, signing the checks, screening renters, making repairs, etc.  It is not a one size fits all.

Steve Vaughan · Answer

What type of property? Residential houses?  Commercial? I handle the two types very differently.

What state are you in?  Some have amazing homestead protections.

How do you currently own? Are you married?

And what the heck does 'we live in one of this estates' mean?  I'm picturing Downton Abby but maybe it's inherited property?

With these answers a pro may better be able to assist.

Carlos C. · Answer

I was not able to paste the link... but search his youtube channel if you need more info.

Carlos C. · Answer

I agree. I researching the Holding LLC setup and getting quotes and from lawyers and experiences from members of this forum and other... trying to narrow it down. Thanks

The Wyoming LLC is a COPE (Charging Order Protection Entity). I think there are 13 states that provide this advantage... and Wyoming is one of the best. Here a link with more info on it. Mark J Kohler is one of the lawyers that Im considering hiring.

James Galla · Answer

Why a Wyoming LLC? What's so special about Wyoming?

William Carpenter · Answer

the series inside of a series llc is a separate llc entity, but not a separate taxable entity, so they all have the same EIN and reported on a single tax return. It’s a real shit show to prepare them, this coming from someone who has done them. It’s like having a disregarded entity, but has the possibility of different ownership structures for each series. I know in Kansas the series doesn’t require an annual report for the series every year like regular llc’s.

In my opinion, not sure on legal reasons, but for tax prep reasons, you are just as well off as having a holding company llc that owns multiple disregarded llc entities. Then each llc would have a separate ein but still be on a single tax filing because they are all owned just by the holding company. From a preparation perspective this keeps it cleaner, especially if any llc were to ever have different ownership, the the holding just gets the k1 for it’s proportional share. Different ownership in a series in a tax prep pain. this route does have some additional cost because you need the organizational docs for each llc instead of just adding and removing the series. If you are set on a series, do it only if all series have the same ownership through out all of them. If you have separate ownership at all, do a new entity for this portion.

Carlos C. · Answer

The Land trust suggestion was to add anonymity to the owner of the real estate, making it harder for a lawyer to determine the person that owns the property.

Carlos C. · Answer

I considered the Series LLC as well, but Im not sure if I can open an account for each individual "child" series. I would like to have a checking account per LLC and if the "child" LLC is not technically register with the estate.. I don't know if I can get a EIN number for it.

Also... on the accounting side of it... how money flows from one LLC to the other?

If I have a Holding company, then individual LLCs inside of it... to move rent money from one LLC to the other.. how do I do it? I will have a checking account per LLC all linked in the same profile in one bank.

To answered your question... we are in Kansas City, Kansas.

Thanks.

Heath M. · Answer

My attorney guided me to the series LLC route.

Series LLC or Wyoming Holding Company?

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